Following an entire year of decline, US dairy exports have made an unexpected and impressive comeback. According to the numbers crunched by Italian dairy economic consulting firm CLAL, the recovery was observed in February. The engine that drove this resurgence? Cheese exports – to be specific, an increase of more than 10,000 tons, which indicates a 32.1% year-on-year growth.
What’s more, the pricing strategy for almost all major dairy products seems to have given a helping hand to this export activity. With average unit prices standing at a budget-friendly $4.56/kg, 15% lower year-on-year, cheese exports couldn’t be more appealing!
“Our prediction is that we might witness a possible upward push in SMP prices, if demand flies high. This would particularly be feasible given the recent surge in demand from Asian countries. For now, US production of SMP has been intentionally kept at rock-bottom for several consecutive months, leading to February stocks diminishing to over 30% lower than the same time last year,” reported CLAL.
Supporting CLAL’s report, FAS-USDA data revealed a hike in domestic SMP consumption of over 20% in Jan-Feb 2024.
During the Agricultural Outlook Forum hosted in February by USDA, Agricultural Economist Michael McConnell projected dairy exports to outpace imports. Owed to a tight squeeze on supplies in the global markets, this is likely to hike the competitiveness of US dairy prices.
“Overall, global dairy trade is expected to feel the pressure of lower milk production in several key exporters – notably the European Union and New Zealand,” McConnell explained. “This reduction would logically lead to decreased exports of several dairy products, particularly butter and non-fat dairy milk. However, it could serve to prop up global dairy prices.”
He saw a silver-lining, predicting, “The reduced production in Europe and Oceania opens doors for other dairy exporters to fulfill global demand. The US, in this scenario, is in an advantageous position to dispatch products to key markets.”
McConnell did add a note of caution though – while skim-solid exports are forecasted to rise by 4% more than in 2023, the domestic use is ready for a showdown to compete with export demand.
